S1, E3: How to talk to clients about charitable giving

This is the third of five episodes in the first series of Philanthropic Insights that offers advisors an intro to planned giving and dives into how to leverage donor-advised funds for long-term impact. 

In our third episode, Kim Ledger and planned giving expert Kyle Christopherson, MBA, CFP, head of Strategic Growth Services at Ren share why charitable conversations are vital for financial advisors and exactly how to get the conversation started with clients.   

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Until next time, keep giving wisely.

Transcript

Welcome to Ren's Philanthropic Insights video podcast series. Made to help financial advisors make the most of their clients charitable giving I'm your host Kim Ledger, Ren's VP of Complex Assets and I brought in one of our experts from Ren, Kyle Christopherson, SVP of Client Growth, to dive into the topic of different ways advisors can leverage DAFs for long-term impact.

A little bit about Kyle, he has over 20 years of experience in pretty much every aspect of creating and administrating various charitable gift instruments. He's a frequent speaker at national and regional conferences educating financial professionals and planned giving officers on how to create effective charitable planning strategies. Welcome back, Kyle.

Thank you, Kim. 

Yeah, our third session today.

Third session.

Yeah, so we have talked about charitable giving in general, we've talked about what a DAF is because of their popularity. So today, we're going to talk about having that conversation with your clients as a financial advisor, having those charitable conversations, and why it's important. 

As you know, I spent a number of years, we don't need to state a number, but I've spent a number of years in the financial services industry. And for me, it was pretty natural, when we were bringing in a new client to have that charitable conversation, it was pretty easy as part of that fact-finding portion of the conversation just to bring that in. But what happens if you've had a client for a long time, how do you broach that subject? How would you approach that?

I've spoken with a lot of financial advisors, and everyone's got their own way of working with their clients to get information, getting to know them a little bit better, right? And like you mentioned, an ideal time is when you're having that first conversation with them and going through the initial discovery. And when you're going through that discovery session, you're talking about their estate planning goals, retirement plan goals, college funding, getting all that information together. But it's at that time where you really want to start diving into some of the charitable planning goals, determining if that client has charitable interests, if they're looking to support charity long-term, through the family, how they're supporting the charities that they believe in and want to make sure are supported into the future.

But inevitably, sometimes maybe you're just getting engaged with charitable planning as an advisor, you're learning about the benefits. And now you want to go back to your existing clients and start talking about charitable planning and seeing if there's additional value you can provide your clients. 

What a lot of advisors that I've worked with that have gone and completed is just going back to, maybe it's a check-in meeting, maybe it's twice a year you get with your clients, you review their goals, here's where you're at progress towards your goals, has anything changed? And at that time, you can bring up some conversations related to charitable planning to understand where they are at. And again, going back to episode one, when we're talking about the popularity of charitable giving, keep in mind again, when we had mentioned that roughly 90% of clients are charitable motivated, right? They're already giving. So if they're not speaking to you as the financial advisor, they're speaking to someone else. So we want to make sure that as the financial advisor, you're providing all of the resources and advice to your clients to make sure they're achieving all of their goals, not just from the financial, but the charitable aspect as well. 

Right, if they're going to be giving anyway, help them do it in a cost-effective and tax-efficient way, right? 

Absolutely, be strategic about it. 

Exactly, exactly. Which is why we always say give wisely.  

That's right, give wisely, that's where it comes from.

Well, are there specific questions that you can think of that you would ask a client? 

Yeah, I think it's, you know, right out of the gate, it's, you know, just asking them, you know, do you give to charity? How frequently do you give to charity? But you want to make sure, as with any other discovery questions…

…So I got to tell you, I did that once. I said, do you give to charity? And the answer that I got was, yes. 

Yes, no. So you're not going to get a lot of information with it. You want to use a lot of open -ended questions, but you know, you know, go into the subject of talking about charitable you know, where their charitable motivation is. Are they giving currently to charity? How often? And get into that, but also start diving into, well, what type of charities do you support? And ask them why? And you know, I think that's the first step for clients really opening up and going, wow, you're going into a deeper relationship now with the client, because now it's not at the surface. Now you're really understanding what really makes them tick and what they're passionate about, what their beliefs are, because that's typically where individuals are going to gravitate to those charities that are matching their beliefs.

Exactly. I had a client who had a brother who died of a rare cancer, and she earmarked seven and a half million dollars for a research project. – Right, right - And it was fantastic. So yeah, I learned a lot about that client through that. 

It's a whole other aspect that otherwise you would never have known about. - Exactly - And I think what a lot of times advisors find out from having these conversations is, wow, because I have the deeper relationship, now I feel like I've got a strong relationship that now my client is more satisfied. Now they're going out and producing more referrals. And so there's a lot of advantages to doing that. But I think one of the questions that is also important when you're talking about charitable planning is, you know a great question that I came across was, “What was the most meaningful gift you've ever made and why?” And that's another way to get into you know real great conversation with their client to understand it better.

Great emotional connection with a client.

Absolutely, and of course as they're talking with you they're you know you want to piggyback on those answers and responses and dig a little bit deeper but it's important to find out, you know, how frequently they're giving to charity, you know, how are they giving to charity? Is it cash, is it checks, is it transferring securities, you know? It's not just that they could be volunteering their time.

Oh, that's a good point and especially that next generation.

Absolutely, a lot of times families as a unit are going to go over to a charitable organization and they volunteered their time as a family maybe it's a food pantry maybe it's you know putting together Thanksgiving meals during the holidays whatever it might be, but they do it as a family and it's kind of a way to build your values. That's important to understand the how and we talked about the why, what, which charities they are supporting and why and then also determine you know how are they doing that today beyond just cash or checks or securities but is there a structure that they have in place such as a private foundation a donor-advised fund do they have a tool that you're not aware of?

 Yeah, that's a good point. Absolutely. Because maybe they set that up on their own not thinking that you could help them. So that's a very good point.

There was a client of mine that was a veteran, and he was really passionate about the schooling that he had received. He was president of a company when he retired and so when he retired he set up a scholarship fund for other veterans. So people coming back after their tour, they were able to apply for the scholarship. And that was really meaningful to him. And he would get teary eyed. And when he talked about it, it was just really important to him.

That's a great success story. I think something else that I've noticed as well is there's more and more demand for the family giving plan. Especially with the higher net worth families, they want to formalize their charitable giving strategy and formalize it as far as which charities that they want to support, how much they want to support in a given period of time, how they're going to do that. Is it with the parents? Is it with the children? But it gets the entire family engaged and moving towards a common goal for the charitable giving aspect. That’s something else to consider as you're talking with your clients. You might want to formalize that with the family giving plan as an additional resource. 

You know, and there's an advisor that I work with that does that with their clients. They formalize some sort of giving structure. Yeah, memorialize it in a document saying, "Here are the charities that we want to support" and how we want to go about that on an annual basis." And that's just part of their process when they set up the donor-advised fund.

Yeah, absolutely, that's great. 

It is. Are there benefits to the financial advisor for talking about charitable giving? 

Yeah, and we've mentioned this a few times in our prior episodes as well, but you know, anytime we're talking about charitable giving strategies with our clients, you get to know them better, it creates that deepening of the relationship. And that helps to, you know, make sure that that relationship is going to be strong for the future. But depending on the charitable giving structure, you have the opportunity to start engaging with the next generation. –

We all want that.

Absolutely, because if you look at the statistics, I think Kim, is it around 80% when the client passes away and it goes to the children, 80% of those assets typically are going to go to another financial advisor. To protect yourself against that as a financial advisor, to make sure that you are the go-to person for that family regardless of generation. You can start building that relationship with the next generation with this charitable giving strategy. For example, a donor-advised fund is a great component of that charitable giving strategy where the children can be the successor grant advisors like we spoke about in the prior episode. And now as a financial advisor, you're going to start having meetings and conversations with them because you're typically the one that's going to be managing those assets of the donor-advised fund. So going into the next generation, building that bridge, you know, just providing your clients with a tax advantage solution. 

Yeah, especially if you're a holistic wealth management firm. I know that that's really, it's just part of it. Especially ultra-high net worth clients, you know, I think you said earlier that it was 90% ultra-high net worth clients are giving to charity anyway.

Correct. Providing those tax advantage solutions, you know, charitably based. But not a lot of other financial advisors are going to be offering out there. So you're providing them something that's unique and, you know, you know, providing additional value. And I think overall what we have also seen from the statistics that we've looked at is when financial advisors are incorporating charitable planning into their practice, you're seeing a higher satisfaction rate with their clients. That could be attributed back to the stronger relationship. You're seeing increased assets under management. And you're also seeing more referrals as a result of that satisfaction going up and that stronger relationship. Now clients are more trusting of you to be able to bring in more of their friends and family members to you for advice. 

Gosh, that's a great point. That's a great point. 

And we've had a lot of advisors that we've worked with and I know Kim, you've worked with some too that, you know, they start working in charitable planning and they just fall in love with it. 

They do. They do. And then they become serial DAF providers. 

And I've spoken with many financial advisors who are like, wow, there's just a different dynamic to it. Different conversation and the tone of the conversation is different. And they want to specialize just in charitable planning and focus a lot of their efforts on getting more charitable planning clients.

Yeah, that is great. Well, I appreciate your time today. Let's get together again. On next episode, let's talk about how to tell which of your clients would make great DAF prospects. 

Yeah. How do I identify the best client, absolutely.

Yeah. Let's talk about that next time. 

Yeah. That's a great idea.

Thanks everyone for watching, or if you tuned in via podcast, thanks for listening. If you want to learn more about Ren and how we might be able to help with your philanthropic program needs, visit reninc.com or email us at consulting@reninc.com.

We'd also love to hear if you have questions or topics about planned giving you want us to talk about. And, of course, don't miss the great information we have in our Advisors Philanthropic Insights newsletter. Sign-up at reninc.com/advisorinsights. 

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Until next time, I'm Kim Ledger. Give wisely.